Like so many manufactured crises and items of ‘breaking news’ the headlines of the day in August of 2011 about America’s pending debt crisis and the following demise of all financial institutions in our country have now been mostly forgotten. This was to have been the time that the dollar lost its reserve status and the US markets crashed and never recovered.

In case the details have also disappeared from your memory, Standard & Poor’s rating service downgraded the US Debt from AAA to AA+. Many citizens of the world feared that this drop in ratings would transform America into the next Greece, as if the loss of one level would send debt buyers fleeing and lead us to a default. It was quite the circus as S&P announced the US would join such debt-ridden basket cases as Belgium and New Zealand in the AA+ group. The rating service pinned their ratings change on Congress for taking too long to raise the debt ceiling earlier that week and hit the circuit of talk-shows to whip up a frenzy among the American public.

They were successful as the S&P500 Index* dropped (actually plunged!) 6.6% in one day and most of the public speculated that the second financial crisis of the century had arrived. China blasted the US’s debt addiction and called for a new global reserve currency. And Chicken Little proclaimed ‘the sky is falling’.

Today, it’s clear the sky hasn’t fallen. Uncle Sam did not default, and investors didn’t dump US Treasurys whole-heartedly. China significantly increased its holdings of US Debt. Interest rates did not soar. Stocks did not implode. Capital markets did not need to reorganize, and neither did pension funds or other institutional investors.

And, as for the market falling apart, although the S&P500 Index did indeed drop by 6.6% immediately, since that time the Index has gone on to gain 158% (as of last night) over the following seven years. The dollar is still the primary reserve currency in the world, and yet another headline of impending disaster has gone on to the dustbin of old dead headlines.

Market Minute 6-29-2018 – The 4th of July

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051
Phone (602) 252-8700
Fax (602) 252-8701
Toll-Free (877) The-Denk
www.denkinvest.com

This weekly article reflects news, commentary, opinions, viewpoints, analyses and other information developed by Denk Strategic Wealth Partners and/or select but unaffiliated third parties. DSWP provides Market Information for illustrative and informational purposes only. If you wish to receive this weekly commentary by email please contact us at 602-252-8700 or by e-mail at lindaw(at)denkinvest.com. If you are receiving this commentary via email and would prefer not to please let us know either by email or phone.

Ronald Denk is an Advisory Representative offering services through Denk Strategic Wealth Partners, A Registered Investment Advisor. He is also a Registered Representative, offering investments through Lincoln Financial Securities Corporation, Member FINRA/SIPC.

Denk Strategic Wealth Partners is not affiliated with Lincoln Financial Securities Corporation. Information in this commentary is the sole opinion of Denk Strategic Wealth Partners. Past performance is no guarantee of future returns. All market related investments involve various types of risk, which include but are not restricted to, credit risk, interest rate risk, volatility, going concern risk, and market risk.

The Update provides information of a general nature regarding legislative or other developments. None of the information contained herein is intended as legal advice or opinions relative to specific matters, facts, situations or issues. Additional facts, information or future developments may affect the subjects addressed in this document. You should consult with an attorney, accountant or DSWP planner about your particular circumstances before acting on any of this information because it may not be applicable to your situation.

Lincoln Financial Securities and Denk Strategic Wealth Partners and their representatives do not offer tax advice. Please see your tax professional regarding your individual needs.

*The indices are representative of domestic markets and include the average performance of groups of widely held common stocks. Individuals cannot invest directly in any index and unlike investments, indices do not incur management fees, charges, or expenses, therefore specific index returns will be higher. Past performance is not indicative of future results.

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